Survey: Many troops at risk on mortgages, other debt

Dec. 3, 2013 - 05:19PM
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Compared to the civilian population, service members are better at making ends meet, planning ahead and general financial knowledge, according to a new military report on financial capability from the FINRA Investor Education Foundation.

But troops seem to be more at risk when it comes to managing financial products such as mortgages and other types of debt.

Generally, junior troops in paygrades E-1 through E-4 had lower levels of financial capability, followed by senior enlisted personnel (E-7 to E-9), indicating those populations are the most vulnerable, according to date gathered by FINRA and released Tuesday.

The foundation supports research and education that give underserved Americans the knowledge, skills and tools necessary for financial success.

The foundation surveyed 1,000 service members across all components in August and September 2012 as part of its 2012 National Financial Capability Study of U.S. adults, developed in consultation with the President’s Advisory Council on Financial Capability, the Treasury Department and other federal agencies.

Also included were an additional 301 service members from FINRA’s 2012 State-by-State Survey between July and October 2012.

All of the data from the surveys is self-reported by the respondents, and not independently verified with other sources such as account statements.

When researchers compared demographically similar military and civilian populations — males ages 18 to 35 — service members are above the national average when it comes to successfully saving and being able to pay monthly expenses and bills:

■ 50 percent of service members spend less than their income, compared to 38 percent of their civilian counterparts in that age group.

■ 57 percent of service members say it’s not at all difficult to cover their expenses and pay bills, compared to 36 percent of their civilian counterparts.

■ 53 percent of service members have set aside three months’ worth of emergency funds, compared to 37 percent of their civilian counterparts.

■ 73 percent of service members have a retirement account, compared to 41 percent of civilians.

But researchers found that military homeowners are more likely to be “underwater” — owing more on their mortgage than what the home is currently worth in the wake of the economic downturn of recent years.

About 42 percent of male military homeowners ages 18 to 35 are underwater, compared to 27 percent of their male civilian counterparts in that age group.

In the overall survey, inclusive of all ages, 38 percent of military homeowners were underwater.

Researchers note that factors contributing to the high percentage of underwater military homeowners include 0-percent-down loans and relatively recent purchases. About 84 percent of all military homeowners surveyed bought their homes within the past 10 years.

Troops in the younger age range were also more likely to have a mortgage or home equity loan — 36 percent, compared to 26 percent of their civilian peers. Among military respondents of all ages and ranks, 48 percent of service members were homeowners.

The foreclosure rates were similar: 11 percent of 18- to 35-year-old male service members have been involved in foreclosure in the past two years, compared to 8 percent of their civilian peers.

Military males in that age group also are more than twice as likely to have a vehicle loan: 63 percent, compared to 28 percent of their civilian peers.

In addition, 52 percent of male troops ages 18 to 35 carried a credit card balance within the previous 12 months, compared to 30 percent of civilian peers, and 41 percent of troops had student loans, compared to 34 percent of civilians.